The Challenge of Managing Your Sustainability Reputation

Environmental leader logo2 Gregory Unruh, PhD, examines the decision corporate sustainability executives face on whether or not to go public with their initiatives. Many companies fear that promoting or even publicly reporting on their efforts involves the risk of becoming an example of enviro watch dog groups, and creating a negative PR moment as opposed to a positive reputation bump. Unruh states that corporations that refrain publicizing their actions will still be vetted and examined by bloggers, consumers and more.

Posted Mar. 31, 2010
By Gregory Unruh, PhD, Environmental Leader

I often hear managers saying, “We don’t talk publicly about our
sustainability and CSR initiatives. We do it because it’s the right
thing to do. For us, it’s action, not words.” A high minded posture, and
not without strategic benefit. Some companies have found that sticking
their heads up over the parapet and proclaiming their corporate virtue
sets them up as a target for activist groups ready to pounce on any
misstep. But as a recent CSR audit for a large national restaurant chain
undertaken by the Thunderbird School of Global Business highlighted,
this is a growing challenge for corporate sustainability executives.

Silence around one company’s responsibilities can become an untenable
reputation vacuum filled by bloggers, critiques, analysts and
competitors, just to name a few. The restaurant chain’s sustainability
reputation was already being constructed in traditional and social media
– even before their formal CSR strategy was finalized. As a colleague
of mine says, “Stakeholders are not waiting for you to take the lead in
the dialogue on social and environmental responsibility; they are
already out there defining what your organization is all about.”

We can thank the internet for that. Stakeholders – that is anyone
with an interest or “stake” in your company’s actions – have been
empowered by the glass-house transparency of ubiquitous information.
Business intelligence is no longer confined to the pages of business
magazines or boardroom rumors. It’s available through Web sites of
government agencies, employee social networks and blogs, activist
reports, online community discussion boards, supplier’s financial
reports, and so on. And the social media explosion can create a
reverberation effect as stakeholders share what they discover and build
upon each other’s beliefs. A very real possibility is that one
disgruntled stakeholder’s opinions can become amplified into generally
accepted truth.

Perceptions can become reality before you know it.

The Social Sustainability Perception

So companies should manage their social and environmental
responsibilities – and their sustainability reputation – actively,
right? A one word answer is “yes”, but it’s not that simple. Many
companies have turned to their PR and marketing departments to manage
their sustainability reputations. But managing a “brand” and managing a
“reputation” for being a sustainable and responsible company are quite
different tasks, as the case of oil giant BP illustrates.

In an effort to break free from the general negative public
perception of oil companies, BP launched an ambitious re-branding effort
in 2000 called “Beyond Petroleum.” As the name says, BP was casting
itself as a different kind of oil company, looking ahead to a cleaner
future after oil. The company spent upwards of half-a-billion dollars
changing its logo to a sunflower and putting solar panels on its service
stations. It also invested in renewable energy companies. But critics
cried “greenwashing,” pointing out that over 90 percent of the company’s
revenues continued to come from its oil business. Fortune magazine
noted, “Here’s a novel advertising strategy – pitch your least important
product and ignore your most important one.”

Most established companies are in a similar situation to BP. They
have products and services they can’t change overnight, developed in a
time before climate change and human rights were major concerns. Any
step forward to a more sustainable strategy can always be contrasted
with the unsustainable legacy segments of the business. The reason
products are scrutinized holistically in this manner lies in the nature
of sustainability itself. In the words of environmental movement founder
Barry Commoner, “Everything connects to everything else.”
Sustainability is a holistic systems condition, something that activists
won’t let you forget. Anything less than a sustainability “full-Monty”
may leave you open to questions, criticism and charges of
“greenwashing.”

How do companies get around this? The first step is demonstrating to
your stakeholders that you understand the environmental and social
implications of your company’s actions. It’s important to express your
understanding of where your responsibilities lie, and to illustrate the
company’s dedication to improving its positive impact on the global
environment. This can’t be done unilaterally – it requires clarifying
that your perceptions of corporate responsibility are aligned with your
stakeholder’s expectations. Quite simply, it’s a negotiation. Once you
are clear on where your responsibilities lie, you then have to make –
and fulfill – commitments to improve your company’s social and
environmental performance. Only then can you begin to engender trust in
your corporate efforts. And over time, that trust leads to a reputation
for sustainable corporate action.

Expectations management is also a key puzzle piece. True
sustainability won’t happen overnight, but you understand the ultimate
gain – and the investment. You’ve got to be in it for the long haul.

Gregory Unruh, Ph.D., is a professor of global business and
director of the Lincoln Center for Ethics in Global Management at
Thunderbird School of Global Management. Unruh is a leading expert on
sustainable business strategy and an outspoken advocate of ethics and
corporate social responsibility. In his forthcoming book Earth, Inc.
(April 2010), he provides a framework for how managers can adopt the
biosphere’s sustainability principles and transform their companies into
both environmentally sustainable and financially profitable
enterprises. Follow him on Twitter @gregoryunruh.

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